Chart Of The Day: Is The ECB Responsible For The Second Coming Of BitCoin?

That precious metals are not the best friends of central banks, whose sole provenance is in creating, and lately massively diluting, faith-based fiat currency is no secret, especially not after the recent snafu involving the Bundesbank and its shocking gold repatriation announcement which came in direct refutation of its public statements just 2 months earlier about faith in the NY Fed this, and bashing of a "phantom debate" on the safety of gold reserves that. Yet it was not gold gold, silver or even tungsten that was the object of derision in an amusing paper released by the ECB in early November titled "Virtual Currency Schemes", which we profiled at the time, but rather the decentralized electronic currency BitCoin, which was supposed to highlight what, in the eyes of the Draghi-led Frankfurt institutions, is nothing but a Ponzi scheme.

Why the ECB suddenly felt threatened so much by Bitcoin, it felt an imperative to issue a 55 page paper decrying such electronic currencies we will never know. What we do know, however, courtesy of a reminder by Bloomberg's Max Raskin, is that since the publication of said paper, the value of Bitcoin as tracked by the Mtgox exchange, has soared some 40% in just under three months, from a "fiat equivalent value" of $13 to a most recent closing price of $18.50, and has doubled in the past 12 months alone.

So one wonders: after soaring to an all time high of $30 before crashing concurrent with the epic May 1, 2011 takedown of silver, was none other than the European Central Bank responsible for the recent second coming of BitCoin which is now slowly but surely creeping back to its all time highs, and what happens to all alternative "virtual" currencies once BitCoin returns to all time highs: will the Fed, the ECB, and the BIS have their hands full with pushing gold lower to care too much about this electronic currency, or will their attention then be diverted away from the daily precious metals smackdown to focus on this threat that at least in Europe is so large, the ECB itself had to chime in?

The CHART OF THE DAY shows that bitcoin has more than doubled in the past 12 months, strengthening to $16.37 from $5.88, according to data from Mt. Gox, the world’s largest bitcoin exchange. The money, issued by a decentralized network of computers, has recovered after falling to $2.14 in November 2011 from a high of $29.58 five months earlier.

Greater demand for virtual currencies could have a negative impact on the reputation of central banks, according to a report published by the European Central Bank in October last year. Since the report was released, bitcoin has risen more than 55 percent against the dollar and use of the currency has surged.

Bitpay Inc., a bitcoin payment processing company that recently raised $510,000 in an investment round, this month announced that the number of companies using its services has increased almost 50 percent to more than 2,000 since November, when blog management firm WordPress.com said it would accept the digital currency.

I think the ECB obviously is concerned, and it’s not reputational,” said Steve Hanke, a professor at Johns Hopkins University in Baltimore who helped to establish new currency regimes in countries such as Argentina and Bulgaria. “I think it’s a competitive threat. Maybe virtual currencies will be so convenient that they will pose a threat because of their ease of use.”

And as a reminder, for pure comedy value, here is the ECB, again, defining what a Ponzi scheme is without referencing itself even once:

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity

Listen to the ECB: if nothing, it certainly is an expert on the topic of Ponzi schemes.

Robert Prechter over at Elliott Wave called the start in this bitcoin market before anyone. As the debt markets begin to implode across the world, more and more people are going to begin using alternative currencies. The following is an excellent walk through of the coming bond bubble implosion:

WARNING: Bitcoin is a SCAM. Bitcoin is an idiotic experiment which proves that a non-centrally planned currency is simply unfeasible. Bitcoin is highly corruptible as it is 100% computerized, unregulated and unmanaged. What if somebody cracks the code to your wallet? What if the code breaks? Libertardians never consider intricate details like this because they are too simplistic. The libertarian dream of perfectly functioning ‘free markets’ is a ridiculous fantasy. The only way to ensure peace and happiness is to delegate responsibility to democratically elected politicians with the skills, experience and education to manage complex social and economic issues.

BitCoin is not un-regulated. It is a-regulated. "a" means "not" in Latin in case you were wondering. I know this may seem confusing, but it's along the lines of immoral vs. amoral. Corporations are amoral. They can't be good or bad, although immoral human beings will use that to their advantage.

There is no need to regulate or manage something that can't be regulated or managed. The protocol has a predictable and publicly available algorithm for deflation built in for stability purposes.

I realize that I shouldn't feed you, and that you know all of this, but for the sake of the AI out there I don't want them to be mislead.

But I'll tell you one thing: IF YOU DO SOMETHING THAT'S BETTER THAN BITCOIN IN CRUCIAL ASPECTS, I WILL BUY IT. I won't sell any bitcoin, but I'll put ten grand in your idea. If you can preserve the properties of bitcoin and enhance something that nobody has thought of, I WILL BUY IT, because you have a genius idea in your hands and I want some part of that.

I think what he was saying was that the alt coins/chains must prove viability, sort of like a darwinian principle of sound monies, only the strong survive. That being said I can't wait till I purchase my first 400' Yacht when my Butterfly ASIC arrives! ( TEE HEE )

My own GPG signature backed by my own gold and silver coins and bars known to those I associate with who also have assets of similar value is of higher value than any bitcoin. Even higher value is me in person holding such a coin or bar for trade on the spot.

Yeah people!!!11 An open source project that anyone can see exactly how it works and what it does that isn't controled by anyone is a SCAM! Just keep using your fiat money, it served us well so far!!11 And don't even dare to think about buying gold or silver...

Anyone can produce it and mold it into coin shaped objects. All one needs to do is eat, wait about 8-10 hours, and voila!!!

Just grab some, flatten it out, and cut into a disc shaped object of any size. You may want to wait a while before flattening depending upon what you ate. Once the coin has hardened, you've got a ShitCoin™.

Each ShitCoin™ has a unique DNA and this makes it one of the most trusted forms of payment by vendors around the world.

I'm selling ShitCoin's if anyone is interested and I will accept US Dollars or any other fiat currency. $10 US for a 3 lbs bag plus $5 for shipping and handling.

hey million dollar jackass, the best hackers in the world have tried to hack bitcoin in a open worldwide peer review for several years now, and the best have all tried and failed. Besides, how would a fascist like u know if a free market functions or not since we have never had one in this country? The myth of the darwinianism of a free market only works if inventions such as Tesla's free energy devices were not prevented from reaching the marketplace, & TB2F companies are allowed to fail. The idea of finding peace or happiness by delegating the responsibility to a corrupt politician is unamerican and dumb.

Jesus fuck, you got sucked in. The best bitcoin hackers set up exchanges, collected tons of bitcoins then traded them out for currency while collapsing the exchange itself because "the exchange was hacked". Idiots.

In fact, it mimics banking system perfectly: a con-artist/"social engineer" (bank) cons a network of trusting patsies (bank customers) into lending them money... and then you're both broke and indebted to cover for the fraud, as we know.

Look ~ I'll be clear here... In order for something to WORK in this world, it has to be UNCOMPLICATED... Forget about the technological infrastructure & 'non'-ubiquitous aspects for a moment [in a SO CALLED 'Global Economy']... People simply don't UNDERSTAND IT... [as proof: if an instant poll were to be taken right now ~ more people would probably have FAITH in the MSM or GOVERNMENT than they would to put all their net worth in a Bitcoin basket]...

The REASON I say it's a 'money printers best friend' is that if a competing system arises [then falters due to complications, or a myriad of other reasons], then people will RUN AWAY from it faster than they gravitated to it in the first place...